Wed, Apr 15, 2015 - Page 13 News List

Compal sets sights on Silicon Valley

‘AGGRESSIVE’ ACQUISITIONS:The firm plans to buy a stake in a Taiwanese PC maker, and is targeting Silicon Valley companies in deals worth ‘several million’ US dollars each

Bloomberg

Compal Electronics Inc (仁寶) is in talks to buy companies in Silicon Valley and Taiwan as the contract manufacturer embarks on “aggressive” acquisitions to reduce its reliance on notebook computers.

US targets include a provider of network download software and a developer of 3D printing technology, Compal chief executive officer Ray Chen (陳瑞聰) said in an interview.

Compal is also set to buy a stake in a Taiwan-based industrial PC maker by the end of this year, he said, declining to name targets.

Compal is withstanding a slump in the global PC market by shifting more contract production to tablet computers and smartphones. Chen purchased a minority stake in Avalue Technology Inc (安勤) last year as part of a strategy to boost sales of industrial computing hardware and software in healthcare, sports and fitness.

“Our intention is to invest and take more aggressive M&A [mergers and acquisitions] into the new category,” Chen said at the company’s Taipei headquarters on Monday.

Compal is likely to become the second-largest shareholder after the founders in the US targets, before possibly increasing its stake, he said.

One target makes software to speed downloads for applications that analyze large amounts of data. Another provides technology that allows products to be prototyped using 3D printing, Chen said. The deals would be worth “several million” US dollars each, he said without being more specific.

Compal had NT$75 billion (US$2.4 billion) in cash and equivalents at the end of last year and has no plans to conduct share buybacks, Chen said.

Compal shares were unchanged at NT$27.05 at the close of Taipei trading on Monday, after dropping by as much as 1.7 percent earlier, while the benchmark TAIEX fell 0.25 percent.

The stock has climbed by 21.85 percent this year, outperforming a 3.6 percent gain in the TAIEX.

Compal is the largest contract manufacturer of notebooks after local rival Quanta Computer Inc (廣達). The company’s customers include Lenovo Group Ltd (聯想), Hewlett-Packard Co and Dell Inc.

Non-PC products accounted for 23 percent of sales last year, with Compal expecting that to pass 30 percent this year.

Global PC industry shipments fell by 6.7 percent to 68.5 million units in the quarter ending last month, market researcher International Data Corp said in a statement on Monday.

Compal’s move beyond PCs has shown mixed success, with the company landing some orders to make Apple Inc’s iPad mini and tablets for Amazon.com Inc. Its smartphone client list is limited to smaller players such as HTC Corp (宏達電), Microsoft Corp’s Nokia business and Sony Corp.

Winning orders from Micromax Informatics Ltd, the biggest India-based smartphone maker, and China’s Coolpad Group Ltd (酷派) could help double phone shipments to 35 million this year, while notebook sales volume might only increase slightly to about 44 million, he said. Compal’s smartphone sales should outpace notebooks next year, Chen said.

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